Mortgage mis-sold / bad brokering?

Jon123_2

Hi,

Can you help advise on this situation?

Last year having failed to sell our flat and buy a house we decided to buy a house anyway and rent out our flat. Our broker phoned around and some lenders said they could help finance it all. So we were after a new house purchase mortgage and a re-mortgage on the flat to release some equity.

Initially C&G told our broker that since we have sufficient personal income to cover both mortgages (combined total £1200 pcm) then we could class our flat as a "2nd-home / holiday home" and get a much better deal than a buy-to-let mortgage. Great news! Thanks C&G! But...too good to be true. A while after we applied I casually mentioned getting tenants and the person I spoke to told me that we could not get tenants for our flat on the 2nd home mortgage rate. So we were forced onto a buy-to-let and over 3 years I'll have spent an extra ~£5000 in the increased fee and repayments.

Essentially their mistake meant that we went with C&G rather than the other companies who had invited our application. But they eventually forced us onto a deal that may or may not have been competitive.

What do you think? Can I get myself back on the original deal. It's all gone through now and I'm in the new house and tenants are in the flat. The annoying thing is that after 6 months we could have applied for permission to let and stayed on the original deal. They are obviously keen to squeeze as much money out of me as possible and don't care that they screwed up. Oh and to top it all off the day before completion we found out that they had shut down our application for no reason. I'm so glad that I am not having to deal with them day-to-day any more.

Cheers
Jon

Conrad

A second home is exactly as it says on the tin - a second residence, not a let property.

Dan_1976

COnrad is correct. You may or may not know that buy to let mortgages are not regulated but a second home/holdiay home or whatever you call it is.

THis policy of C&G was abused a lot, if a family member lived in your flat you can have the better deal.

What C&G did was right, if they were not aware of the tenants at the start then they would have changed the deal and policy to match.

Now lets look at your broker, this condition about 2nd homes etc is known, and as I mentioned was and probably still is being abused, have you been caught out or has your broker been caught out?

dunstonh

When you were first arranging the mortgage did you state that it was to be let out?

As the other responses confirm, a second home mortgage is different to a buy to let mortgage. So, you need to be clear on what you applied for and if that is what you wanted at the time.

Jon123_2

Yeah...my broker has had a lot on his plate at the moment - business dropped through the floor during the credit crunch and he has had to get a second full time job to make ends meet. Perhaps he took his eye off the ball. But anyway he says he fully presented our needs to C&G and specifically mentioned the letting issue. He has notes from the phone call he made to them but he didn't write down the name of the guy he spoke to. He also double checked when I queried the 2nd home thing. The specific thing that C&G said was that the rental income wasn't necessary as we passed affordability checks, hence we could apply for the better product. Obviously the guy was wrong. Can I get them to do the honourable thing?

The annoying thing is that if I had not got tenants for 6 months (cost to me = £1200) I could have just written a letter asking for permission to let and they may well have given it to me and I'd have kept the rate. I wish I had done so in a way.

What's the best you think I could get out of them?

Jon

Conrad

Jon I'm not following you at all here.
Are you saying you have 2 C & G mortgages and after completion they put one onto a buy to let, when you had expected both to be left on the residential low rate you had completed on?

Make a bullet point timeline and be very very clear.

Jon123_2

Dear Conrad,

Sorry for being unclear. Here's how it happened:

1) Lenders approached to provide finance for purchase of new house and remortgage of existing flat which would subsequently be let out.

2) C&G analysed our position & finances and deemed that we could afford both mortgages without relying on any rental income. They invited us to apply for both mortgages with the remortgage as a 2nd home.

3) We applied via our broker.

4) Mortgage offers were sent out. I called to confirm that the flat will be tenanted (the small print said we needed their written approval) and they retracted their offer and advised me to get a BTL instead, which we did.

4) Both offers proceeded to completion.

5) Having been messed around about this, and a lot of other stuff during the process I initiated a complaint. They say they can't find any records of talking to our broker. They say he should have known that we couldn't let out a 2nd home as it is clearly stated on their intermediary website. They clearly don't accept responsibility for advising us to get the wrong product. I do trust my broker when he says that he told them about the letting issue as he also called other companies and they offered us BTL deals. C&G mistakenly offered us something a lot better so we went with them.

Hope that helps,
jon

Dan_1976

So you told C&G after the offer was released about your tenant! There you are then!

They can't offer you a standard product due to reg's and in theory you applied for a mortgage and obtained funds by fraud!

I know it sounds harsh but your broker has been caught out, also he probably put it through his BDM and you talking to C&G got you and your broker caught!

You should have never had the lower rate in the first place!

Mrs_Bumble

If your broker spoke to C&G about the let to buy situation (many lenders did allow this on different basis to buy to let) then he should have note of when he spoke to them and I would hope approximately what time, in this case the call should be recorded and it would bring whatever was discussed to light.

If he spoke to a C&G BDM then it is doubtful the call would have been recorded.

It is also possible that C&G policy at the time of the application was different to what it is now, their position now (checked their intermediary website) is that they treat let to buy exactly the same as buy to let, C&G because of the internal restructuring recently have been changing their lending criteria and therefore it is possible that the criteria was different at application and perhaps asking this question would shed a bit more light.

Dan_1976

Whatever happened though Mrs Bumble, C&G could and should not offer a standard resi mortgage on a buy to let, the staff would be breaking regs!

Mrs_Bumble

Dan_1976 wrote: »

Whatever happened though Mrs Bumble, C&G could and should not offer a standard resi mortgage on a buy to let, the staff would be breaking regs!

If it was done on a let to buy basis that would have been different, which is my point really, has C&G criteria changed.